Tax Legal Questions

You haven't provided enough information to answer the question. The lender has discharged the mortgage, but has it released you from liability to repay the loan? The mortgage is only an instrument to secure your obligation to repay the loan. You would only have discharge of indebtedness income if you were released from the obligation to repay the loan.... Read More

The extent to which the actual settlement payment will be taxable income to you, if any, is likely already determined and there may not be anything you can do at this point to avoid those taxes. As for the funds themselves, you really need to seek the help of a competent financial planner to help you determine the best ways to invest the funds. Avoiding or reducing income taxes is part, but not all, of determining the best way for you to use the funds. Keeping everything in cash is very likely NOT the best answer. A good, tax-focused CPA can also be greatly helpful. And you should likely consult a good estate planning attorney to ensure that you have a good power of attorney and Advance Directive in place for yourself, and that you have a Will or trust in place so that, if you pass away, any remaining assets you have will pass to your intended beneficiaries in a beneficial manner.... Read More

Your wife's sister will have to file a gift tax return for her ownership interest in the property.  However, she probably won't owe a gift tax. Your wife will have a transferred basis in the property, equal to what her sister's basis was in the property. There is no reassessment of the property for property tax purposes on the transfer by a bona fide gift.... Read More

When the US person deposits money in the joint bank account, there is no gift.  However, when the foreign person withdraws money from that joint account, then there is a completed gift.  The US person can give up to $14,000 a year to the foreign person.  If the US person gives more than that, then the US person will be required to file a gift tax return, but a gift tax will not be owed until the US person exhausts his $5.45M lifetime exclusion.... Read More

If the person living in the place has agreed to pay the property taxes as part of payment for the right to live there, then yes, it is "right." If that wasn't part of the agreement, and the person living in the property feels that he or she is being forced to pay fair rent, PLUS the property taxes, then maybe it's not "right." It's not illegal, however; it's a contract question. If the person living in the property feels he or she is paying more to live there than he or she should be, then the next step is to have that discussion with the owner of the property and try to work out a more acceptable arrangement. Or, get a new place to live. Best wishes.... Read More

We do proerty tax appeals on both a contingency fee basis or an hourly fee basis. You can decide. The key is how your assessment compares with the market value of the property. If the assessment is far higher than the market value, you will be successful. Please call to discuss. Ed Dimon 732-797-1600... Read More

It sounds like you have what is referred to by the IRS as a partial payment installment agreement.  This arrangement is available for taxpayers who cannot afford to pay their tax liability within the Collection Statute Expiration Date (CSED).  I can attest that this is legal.  For issues of morality please consult lawyers.com's sister site, KantPayTaxes.com Said another way, the IRS has 10 years to collect from you.  Once that 10 year period has run, the debt drops away and is no longer collectible.  There are a lot of nuances to this, but essentially the IRS looks at how much you owe and divides that by how many months they have left to collect.  If that amount is greater than your ability to pay, then they allow you to enter into a Partial Payment Installment Agreement.  The good news is that you may never pay the full amount to the IRS within the CSED, but the bad news is that they will file a tax lien. If you want to pay them less or no money you have a few options: 1. Currently Not Collectible:  This status is like saying, "I owe you the money, but I cannot afford to pay anything at this time."  Again, the IRS will file a tax lien, but you won't be burdened by a monthly payment and the Statute of Limitations continues to run. 2. Lesser Partial Payment Installment Agreement:  This is the same as what you have now, but with a lower monthly payment.  A lower monthly payment may be obtained by optimizing your Collection Information Statement (Form 433F) to obtain all possible deductions.  For instance, the IRS wlll allow a $60 monthly expense for out of pocket medical expenses ($144 if you are over 65).  If this expense wasn't factored in the first time they determined your ability to pay, you may be able to reduce your monthly payment by $60 or $144.  There are a handful of these issues that can make a big difference in the cumulative. 3. Offer In Compromise.  This is a settlement with the IRS.  You offer them a lump some payable over 1 or 2 years and if accepted your liability is resolved.  There are a lot of considerations with this resolution including your monthly income and expenses as well as you assets and liablities, but it is certainly an option. 4. Bankruptcy.  If your tax debt meets the requrirements of having been due for 3 years, filed for 2 years, and assessed for 180 days, then it may dischargeable through a Chapter 7 bankruptcy or considered Non-Priority Debt under a Chapter 13.  The catch here is that you need to file for bankruptcy and there won't be much benefit for a 2012, 2013, or 2014 tax debt. I hope this information helps.   Best regards, Adam Brewer, Esq.... Read More

Good Afternoon, You likely have a few options to resolve this issue, but I will touch on the two simplest methods: 1.  File The Return for Reconsideration.  You may be able to request Wage and Income Transcripts and other information from the IRS to determine the basis for the assessment of taxes.  The information may not be readily avaialbe since the return is from 14 years ago, but transcripts can likely be obtained one way or another.  If the information provided to the IRS from third parties (W-2's, 1099-misc...) is incorrect or shows that you should not owe the tax due, then you can file a new return for Reconsideration.  Once processed, this return should reduce the balance due. 2.  Wait Out the Statute of Limitations.  Since the tax is from 2001, it is likely that the IRS Collection Statute of Limitations will be expiring soon.  The Collection Statutute of Limitations allows the IRS only 10 years to collect from the date of assessment.  If the IRS still has time to collect, then you would want to establish Hardship Status or a Partial Payment Installment Agreement until the the CSOL runs. I hope this helps.   Best regards, Adam Brewer, Esq.... Read More

Statutes of limitations are state laws, so each state has it own rules for collecting income taxes. However in all states, the statute of limitations starts to run when you file your tax return. So if you didn't file a return, the statute never runs. Ohio has a statute of limitations on ASSESSING the tax, meaning they can't change how much you owe after 3 years from when you filed the return. Ohio has no statute of limitations on COLLECTING the tax (plus interest, plus penalties). So if they make an assessment within the time limit, they can hound you for the rest of your life. So, if you filed the return back in day and paid the taxes, you can get this harassment to stop. If you didn't file your return and pay the taxes back then - PAY YOUR TAXES, DEADBEAT, SLACKERS LIKE YOU JACK UP THE RATES FOR EVERYBODY ELSE. Well, not as much as giving multi-billion dollar hospitals and the Felony Clinton Foundation huge tax breaks but every little bit of graft and corruption makes it worse on all Americans. And on Veterans' Day yet, haven't you got any respect?... Read More

Unless you can pay cash and don't need to get a mortgage, or unless you can get a loan from someone other than a regular mortgage lender, it is very unlikely that you will be able to buy a house unless you can show that you didn't file any income tax returns since 1997 because you weren't legally required to do so. Unless your only income for all those years is Social Security benefits and tax-exempt income, or unless you barely had any income at all for all those years, you probably were required to file. If you were required to file and you would have had to have paid additional funds with your returns for any of those years, then you have a big mess on your hands. If you were required to file but your withholdings or estimated tax payments were made and the amounts you actually paid would fully cover any income tax liability you would have had, you have a smaller mess, but still a mess. The best suggestion I can give you is to start taking corrective actions as soon as possible. Find a really good CPA who handles tax controversies and can help you put together as much information as possible, and then file the returns you should have filed. Figure out what, if anything, you owe in taxes, interest, and penalties, and get started on paying that amount. If you do this, you may eventually be able to get a mortgage. Best wishes to you.  ... Read More

An LLC can chose to be taxed as as partnership/sole proprietorship, a C-corp or an S-corp. the most common tax reasons for choosing one form or the other are: Most small businesses chose partnership/sole proprietorship taxation because it eliminates double taxation and it is very flexible. If a small business earns profits from its employees who aren't owners or from capital assets, S-corp taxation avoids double taxation and social security tax on none personal service income. The downside is S-corps are not flexible, the ownership and profit/loss distribution must follow a strict set of rules. If a small business wants to attract minority shareholders, C-corp taxation is necessary because minority shareholders usually don't want the possibility of getting taxable income without a cash distribution. There is double taxation in C-corp taxation. There are also non-tax reasons for choosing the various forms. The S-corp form requires that voting rights are proportional to ownership, while partnership/sole prop and C-corp forms allow a minority owner to control the business. C-corp income is only reported as personal income if the cash is received by the owner, partnership/sole prop and S-corp income is reported as personal income regardless of whether it's distributed (if the owner pays alimony based on personal income and she/he needs to keep $250,000 a year in the business to buy equipment or for working capital, she/he probably doesn't want to count that $250,000 in the base for determining alimony). If you're situation is more complex than the above or you don't understand the above, then you need to talk to a tax attorney.... Read More

chapter 11 is difficult because the company is restructuring and you cannot define the loss at this moment. chapter 7 is easier because compnay is going out of business and the loss can be defined. we have a tax attorney and cpa here at the firm to help with these issies. ed dimon 732-797-1600... Read More

The taxation of a trust distribution is determined by the source of the funds in the trust. 1. All of the trust's taxable income is considered to be distributed first. 2. Distributions in excess of trust income is considered nontaxable principal. So if the trust earned $15,000 in 2015 and distributed $40,000. Your son would have $15,000 in taxable income and $25,000 tax free distribution of principal.... Read More

The easiest way to set up a payment plan, is to simply start paying a regular amount. Calculate the amount by paying at least the interest which is currently 3.00% per year plus the amount of taxes divided by the collection period. The collection period is 10 years less the time since you filed the return. For example, if you owe $3,000 on 2012 taxes. The interest is $90 a year ($3,000 x 3%) and the amount divided by the collection period is $3,000 / 7 years = $429. Add those together gets you $519 dollars a year or $44 dollars a month. Pay at least that much every month. Be sure to write that the payment applies to 2012 taxes on your check and the transmittal.... Read More

Extensions for Individuals If you are not able to file your federal individual income tax return by the due date, you may be able to get an automatic 6-month extension of time to file. To do so, you must file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the due date for filing your calendar year return (usually April 15) or fiscal year return. Additional extension of time for taxpayers out of the country. In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. Send the letter by the extended due date (October 15 for calendar year taxpayers) to the following address: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0045... Read More